The Relationship Between Project Governance and Project Success

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The Relationship between Project Governance and Project Success

Article  in  International Journal of Project Management · March 2016


DOI: 10.1016/j.ijproman.2016.01.008

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International Journal of Project Management 34 (2016) 613 – 626
www.elsevier.com/locate/ijproman

The relationship between project governance and


project success☆
Robert Joslin a,1 , Ralf Müller b,2
a
Skema Business School, Lille campus, Avenue Willy Brandt, 59777 Lille, France
b
BI Norwegian Business School, Nydalsveien 37, 0484 Oslo, Norway
Received 5 November 2014; received in revised form 30 December 2015; accepted 15 January 2016
Available online xxxx

Abstract

This study looks at the relationship between project governance and project success from an agency theory and stewardship theory perspective.
For that project governance was operationalized respectively as a) the extent of shareholder versus stakeholder orientation and b) the extent of
behavior versus outcome control, both exercised by the parent organization over its project. A cross-sectional, worldwide online survey yielded
254 usable responses. Factor and regression analyses indicate that project success correlates with increasing stakeholder orientation of the parent
organization, while the types of control mechanisms do not correlate with project success. Results support the importance of stewardship
approaches in the context of successful projects.
© 2016 Elsevier Ltd. APM and IPMA. All rights reserved.

Keywords: Project governance; Project success; Agency theory; Stewardship theory

1. Introduction exponentially in popularity since 2005 (Biesenthal and Wilden,


2014). This stream of literature identifies the structural character-
Forty years of research have brought up a variety of new istics needed for successful project execution (Müller and
success factors (i.e. those elements that, when applied during a Lecoeuvre, 2014). Project governance is “the use of systems,
project's life cycle, increase the project's chances to be successful) structures of authority, and processes to allocate resources and
and extended the number of success criteria (i.e. those measures coordinate or control activity in a project” (Pinto, 2014), it
applied at the end of the project to judge on the project's success). coexists within the corporate governance framework with the
Project success is hereby seen as the achievement of a particular objective to support projects in achieving their organizational
combination of objective and subjective measures, manifested in objectives (Müller, 2009). The majority of published research
the success criteria and measured at the end of a project (Müller on project governance is conceptual, supplemented by some
and Judgev, 2012). But success rates still do not meet expectations qualitative studies and very little quantitative evidence on the
(Judgev and Müller, 2005; Lehtonen and Martinsuo, 2006). relationship between project governance and project success.
Because of that, researchers have started to widen the scope Among the few quantitative studies are Wang and Chen's (2006)
of possible success factors and focus more on the structural assessment of governance impact on success in ERP projects, and
characteristics of the project context and its impact on success. Müller and Martinsuo's (2015) investigation of the role of project
One of these factors is project governance, which has grown governance in the relationship between relational norms between
project buyers and suppliers and their joint project's success.
However, both studies showed an important role of governance,
☆ Note: Live in Switzerland hence the Swiss phone numbers.
but were confined to the IT industry. This is in contrast to general
E-mail addresses: robert.p.joslin@gmail.com (R. Joslin),
pmconcepts.ab@gmail.com (R. Müller).
management studies, where the link between corporate gover-
1
Tel.: +33 44 720 1630 (direct), + 33 79 244 8383 (Mobile). nance, management performance, and shareholder value is well
2
Tel.: +47 46 410 613. researched (Amzaleg et al., 2014; Core et al., 1999; Lazonick and

http://dx.doi.org/10.1016/j.ijproman.2016.01.008
0263-7863/00 © 2016 Elsevier Ltd. APM and IPMA. All rights reserved.
614 R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626

O'Sullivan, 2000; Maher and Andersson, 2000). As project the importance of soft factors such as teamwork (Hoegl and
governance is aligned with corporate governance and good Gemünden, 2001) or leadership styles of project managers (Turner
corporate governance is associated with management perfor- and Müller, 2005) and the shared leadership by the team (Cox
mance, a link between project governance and project success et al., 2003) (see Judgev and Müller (2005) a for complete
may be assumed. This will be addressed in the present paper. review). Serra & Kunc (Serra and Kunc, 2014) showed the link
The purpose of this study is to investigate the relationship between strategy planning and execution using benefits realization
between project governance and project success. The aim is to management (BRM) as a success factor. The importance of
understand which forms of project governance relate with project project governance as a success factor in large scale investment
success. To achieve this, the following research question is posed: projects was empirically assessed in two qualitative case studies in
What is the relationship between project governance and South Africa. Using Delphi and nominal group techniques the
project success? researchers found strong agreement among the interviewees that
To answer this question, we first empirically test the the application of governance principles affects project success
correlation between project governance and project success. (Bekker and Steyn, 2008). A recent quantitative study on the
After that we discuss some of the underlying assumptions, which, impact of project management methodologies on project success
when met, may provide indicators for a limited causality. The in different project governance contexts used the analysis
unit of analysis is the relationship between project governance framework from Sharma et al. (1981). Results indicated that
and project success. The study uses the governance paradigms governance has neither a pure moderating nor a mediating role in
framework from Müller and Lecoeuvre (2014), which identifies the methodology – success relationship, thus it indicates that
two governance dimensions: a) a continuum of the extent of governance is an antecedent variable. This is in line with
shareholder versus stakeholder orientation (following Clarke, conceptual studies, which perceive governance to span the entire
2004), and b) a continuum on the level of behavior versus life-cycle of temporary organizations, such as projects. Especially
outcome control (following Ouchi, 1980), as exercised by the the organization's shareholder or stakeholder orientation, as well
project's parent organization. This allows for the contrasting as the organizational control structures can be assumed to exist
views of agency and stewardship theory. Agency theory is hereby before individual projects are launched in these organizations.
seen as a proxy in explaining behavior in more shareholder- Hence, Stinchcombe's (1965) theory may apply, which suggests
oriented governance structures, where contracts and process that “the founding characteristics imprinted at the birth of an
control structures are used to manage the self-serving behavior of organization influence its subsequent behavior” (Van de Ven,
managers for the maximization of shareholder wealth (Berle and 2007). Therefore we assume “temporal precedence of the cause
Means, 1968; Friedman, 1962). Contrarily, stewardship theory is [project governance] occurring before the effect [project success,
taken as a lens explaining behavior in more stakeholder-oriented measured at the end of the project]” (Van de Ven, 2007),
governance structures, where trust and controlling by outcomes/ contingent on the criteria that governance structures are setup by
results serve as a mechanism to govern towards the achievement organizations independent of their project types, thus governance
of organizational goals by balancing the requirements of a diverse structures are not chosen depending on the project at hand, If this
set of stakeholders (Davis et al., 1997c; Müller, 2011). is the case, the empirical test fulfills the first of three criteria for
The study is relevant for practitioners developing success causality, as proposed by the 19th century philosopher John Stuart
related governance structures by pointing out the success Mills and more recently by Van de Ven (2007). The other two
related governance approaches, and for academics in developing criteria (covariation or correlation, and absence of spurious
contingency theories of project performance and results. factors) are addressed in the analysis section of this paper. A
The next section reviews literature on governance, project discussion about a possible causal relationship between project
success, and agency and stewardship theories from which the governance and project success follows in the conclusion section.
hypotheses are derived, followed by the research methodology,
results and discussion sections. The paper finishes with the 2.2. Project success
study's conclusions and its implications.
Historically the understanding of project success criteria has
2. Literature review and hypotheses evolved from the simplistic triple constraint concept, known as the
iron triangle to something that encompasses many additional
2.1. Governance as a success factor on projects success criteria such as quality, stakeholder satisfaction, and
knowledge management. (Atkinson, 1999; Judgev and Müller,
Building on the early success factor models by Pinto, Slevin 2005; Müller and Judgev, 2012; Shenhar and Dvir, 2007). In terms
and Prescott (Pinto and Prescott, 1988; Pinto and Slevin, 1988), of measuring success, a variety of models for measuring project
which covered organizational effectiveness and technical validity, success were developed, such as the popular ones are by Pinto and
the development of success factors diversified significantly over Prescott (1988); Shenhar et al. (2002); Hoegl and Gemünden
the years. Researchers soon realized that success factors without (2001), or Turner and Müller (2006), which are all designed with
structure, grouping, and context would result in increased project different underlying assumptions.
risks; therefore, success factor frameworks were introduced such An amalgamation of these models was done by Khan et al.
as those fostering multi-dimensionality and idiosyncrasy of factors (2013), who analyzed the literature on success criteria of the
(Baccarini, 1999; Shenhar et al., 2001). Further research showed past 40 years. Their model for measuring success was selected
R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626 615

for this study as it is based on most recent literature, which is a say the economists perceived a connection between organiza-
superset of the success criteria from the leading researchers on tional governance and organizational performance. From this
project success. Their model offers a balance between hard and point, researchers started to apply management theories to help
soft factors and measures 25 success criteria variables organized understand the factors that influence corporate governance and
in the five dimensions. The model contains the three criteria, organizational performance (Maher and Andersson, 2000). The
which are typically termed the iron triangle (dimension 1 below), most popular theories applied to corporate governance include
plus four additional project success criteria dimensions: agency theory, stewardship theory, transaction cost economics,
stakeholder theory, shareholder theory and resource dependency
1. Project efficiency, theory (Yusoff and Alhaji, 2012). One of the motivations for using
2. Organizational benefits, general management theories to ground theories in governance of
3. Project impact, corporations was to help frame, understand, and address the issues
4. Stakeholder satisfaction, and associated with poor corporate governance (Hirschey et al., 2009).
5. Future potential. Since the late 1970's, the issues associated with poor corporate
governance and the impact on shareholder value has been well
researched across the major economies (Basu et al., 2007;
Appendix 1 contains the list of success criteria variables
Hirschey et al., 2009). Resolving issues associated with corporate
(questions).
governance has shown to consistently increase shareholder gains
In this paper, project success is assessed for its correlation with
(Gompers et al., 2003).
project governance and then discussed as a possible dependent
Agency theory, which is based on Jensen and Meckling's
variable in a causal relationship.
(1976) work takes an economic view of the shareholder and
manager relationship in companies by assuming rational and
2.3. Project governance
self-interested actors. Agency theory has been used by researchers
in traditional finance and economics, for example, accounting
According to Klakegg et al. (2009), it is important that
(Demski and Feltham, 1978), economics (Spence and Zeckhauser,
governance covers all levels of the organization, starting with
1971), and finance (Fama, 1980), then applied to marketing (Basu
corporate governance flowing from the board level to the
et al., 1985), political science (e.g. Mitnick, 1995), organizational
management level responsible for execution, and down to the
behavior (Eisenhardt, 1985), sociology (Kaiser, 2006), corporate
project level of governance. The definition of corporate
governance (John and Senbet, 1998), and project governance
governance from the Organization for Economic Co-operation
(Turner and Müller, 2003). It posits that corporate managers
and Development (OECD) is:
(agents) may use their control over the allocation of corporate
resources opportunistically in order to pursue objectives not in line
“Involving a set of relationships between a company's
with the interests of the shareholders (principals) (Jensen and
management, its board, its shareholders and other stakeholders
Meckling, 1976). This is exemplified in the principal – agent
[...] and should provide proper incentives for the board and
problem which occurs when both principal and agent act in a
management to pursue objectives that are in the interests of the
self-interested, utility maximizing manner (Mitnick, 1973). Davis
company and its shareholders and should facilitate effective
et al. (1997c) relate this behavior to the lower levels of Maslow's
monitoring OECD (2004)”.
(1970) hierarchy of needs. Principal agent problems arise from
information asymmetry, because one party (e.g. the project
Project-related governance is based on and aligned with manager as agent) has typically more or better information than
corporate governance; but focuses on the governance of individual the other (e.g. the project sponsor as principal) (Wiseman et al.,
projects. The Project Management Institute (PMI®) defines 2012). This results in a moral hazard risk which, unless mitigated,
project governance as “an oversight function that is aligned with is likely to increase the agency effect (Poblete and Spulber, 2012).
the organization's governance model and that encompasses the Popular remedies to the problem include contracts and incentives
project lifecycle [and provides] a consistent method of controlling that motivate agents to act in accordance with their principals,
the project and ensuring its success by defining and documenting controlled through related control structures. Corporate and
and communicating reliable, repeatable project practices” (PMI, project governance, when designed correctly within the context
2013b). Whereas, project governance looks at the governance of of the organization, should minimize the risks and issues
individual projects, the governance of projects looks at a group of associated with agency theory. Agency theory based on Jensen
projects, such as a program or portfolio of projects and therefore and Meckling's (1976) view of principle agent models have been
has a broader perspective (Müller et al., 2014). criticized because they neglect to consider that the principle-agent
Before going into more detail on project governance, it is transitions are socially embedded and therefore impacted by
important to understand the history and application of manage- broader institutional contexts (Davis et al., 1997a; Wiseman et al.,
ment theories in the corporate governance world, because many 2012). In this study we use agency theory as a proxy to explain
of them apply to and are used in project governance. behavior in the shareholder oriented and behavior controlled
Before the 1980's corporate governance was largely in the governance structures.
realm of lawyers until economists became interested in how Stewardship theory arose in response to the criticism regarding
organizations make decisions (Gilson, 1996). Gilson went on to the generalizability of agency theory. It takes a psychological
616 R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626

perspective towards governance and states that the actors project hazards and project success. A study by Müller and
(managers) are stewards whose motives are aligned with the Martinsuo (2015) showed the moderating role of project
higher level objectives of their principles rather than their own, governance in the relationship between relational norms
short term utility maximizing objectives (Donaldson and Davis, between project buyers and suppliers and their joint project's
1991). Davis et al. (1997c) relate this behavior to the higher levels success. Thus, the number of quantitative studies is limited and
of Maslow's (1970) hierarchy of needs. The steward differs from industry specific. The cross sectional study by Joslin and
the agent in that the steward is trustworthy and will make Müller (2015) mentioned above identified governance as a
decisions in the best interests of the organization, whereas an agent quasi-moderator, thus holding an indeterminable role in the
needs to be incentivized and/or controlled to do this. (Davis et al., methodology – success relationship. Complementarily, the
1997b). Stewardship theory has been criticized, because it views qualitative case studies by Bekker and Steyn (2008) indicate an
the organization in a static way and does not account for stewards antecedent relationship between governance and project
resorting back to an agent position when their positions are success. Taken together, the results show lots of variation in
threatened (Pastoriza and Ariño, 2008). In the present study we the role of governance in project success. This knowledge gap
use stewardship theory as a proxy to explain behavior in the calls for further research.
stakeholder oriented and outcome controlled governance Few publications have provided some sort of categorization
structures. system for governance and its context, such as the four
Neither agency theory nor stewardship theory is more valid governance paradigms described by Müller (2009). This model
than the other, as each may be valid for different types of builds on two dimensions. The first dimension addresses the
phenomena (Davis et al., 1997b). This study investigates some corporate-wide governance orientation by using Clarke's
of these phenomena. (2004) continuum from shareholder to stakeholder orientation
Both agency and stewardship theory define the relationship of a firm. The second dimension addresses the control behavior
between actors, thus are task or project level theories. They are exercised by the parent organization over its project, by using
complemented by their organizational counterparts' sharehold- Ouchi's (1980) and Brown and Eisenhardt's (1997) continuum
er and stakeholder theory respectively. These are described from behavior control (i.e. following the process) to outcome
further on this paper. control (i.e. meeting pre-established expectations). The
Transaction cost economics (TCE), is an economic theory operationalization of the paradigms was done by Müller and
which suggests that organizations achieve the lowest transaction Lecoeuvre (2014) and allows a quantitative assessment of a
costs by adapting the governance structures to the nature of the project parent organization's governance position. We choose this
transaction (Williamson, 1979). Resource dependency theory, model for the present study because of its applicability to a wide
suggests that managers are able to prioritize internal and external range of projects, in an attempt to understand organizations'
resources needed to achieve the corporate objectives (Pfeffer and project governance approaches and the role of the two dimensions
Salancik, 1978). When applied, all of these theories have helped for project success over a wide spectrum of possible project types,
to improve corporate governance within organizations, under- industries and geographies.
pinning ethical values and moral choices (Cameron et al., 2004). Literature on corporate governance and corporate performance
In the realm of projects, two of the three elements that shows a relationship between governance and organizational
constitute governance are project governance (governance of success, such that weaker governance mechanisms have greater
individual projects) and the governance of projects (governance of agency problems resulting in lower corporate performance
a group of projects such as a program or portfolio) (Müller et al., (Hart, 1995; Hirschey et al., 2009; John and Senbet, 1998;
2014). Both elements are aligned with the Project Management Ozkan, 2007); greater shareholder rights have a positive impact
Institute (PMI) definitions and governance structures of projects, on corporate performance (Hirschey et al., 2009); and indepen-
programs, and portfolios (PMI, 2013a, 2013b, 2013c). dent boards lead to higher corporate performance (Millstein and
The literature on project governance shows the diversity of MacAvoy, 1998). We transfer this assumption that governance
governance approaches (Müller et al., 2014), covering topics timely precedes organizational success from the general manage-
such as the optimization of the management of projects (Too and ment literature to the realm of projects. This follows the notions of
Weaver, 2014); interrelationship of governance, trust, and ethics Biesenthal and Wilden (2014), as well as Turner and Simister
in temporary organizations (Müller et al., 2013); risk, uncertainty, (2000) who see project governance as important in ensuring
and governance in megaprojects (Sanderson, 2012); governance successful project delivery, and the particular quantitative
in particular sectors such as information technology (Weill and findings by Wang and Chen (2006) for governance of IT projects,
Ross, 2004); and the normalization of deviance (Pinto, 2014). and the broader findings by Joslin and Müller (2015). Hence, we
Papers on governance within the realm of projects have utilized to hypothesize:
a large extent the same management theories used in corporate
Hypothesis 1. Project governance correlates with project success.
governance (Biesenthal and Wilden, 2014).
Quantitative studies on project governance and success were The correlation between corporate governance orientation
mainly done in the IT industry, where Wang and Chen (2006) (i.e. preference for shareholder or stakeholder oriented
used structural equation modelling to show that an equilibrium governance) and project success has not been assessed in the
of explicit contracts, implicit contracts, reputation, and trust as past. A shareholder-orientation of the firm is indicated when an
governance mechanisms mediates the relationship between organization prioritizes the maximization of shareholder wealth
R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626 617

higher than the requirements of other stakeholders (Clarke, management and its maturity (PMI, 2013c), and the recent
1998; Davis et al., 1997c). Hence, when organizations take a popularity of process-based approaches to project management,
more internal view of their raison d'etre (Heblich Hirschey such as Agile/Scrum (Schwaber, 2004), we hypothesize:
et al., 2009). Definition of stakeholders vary. In this paper we
adopt Freeman's (1984) view that stakeholders are those H1.2. Behavior control in project governance correlates positive-
individuals or organizations that might affect the business ly with project success.
objectives and anyone who might be effected by its realization.
A stakeholder oriented organization is characterized by a more Fig. 1 shows the related research model with the two
external view of their raison d'etre as an organization (Heblich governance dimensions as on the left hand side and project
Hirschey et al., 2009), which takes into account the various success on the right.
stakeholder groups and balances their particular requirements
for the accomplishment of organizational objectives (Ansoff, 3. Research methodology
1965; Clarke, 1998). This is exemplified by the project
management literature which historically emphasized the We followed Saunders et al. (2011) process for research
importance of stakeholders in and for project success (e.g. design, which comprises of seven steps: post-positivism was
Eskerod and Huemann, 2013 plus many others). Project used as epistemological stance, because it aims for objectivity
managers view stakeholders as the ultimate receivers of project as an ideal, but is aware of the subjectivity stemming from the
outcome and rank their satisfaction very high. Research showed subjects targeted for data collection. Post-positivism identifies
that project managers in North America rank the importance of trends instead of generalizations (Biedenbach and Müller, 2011).
stakeholders highest among all success criteria, whereas project A deductive approach was chosen for a robust design that includes
managers in other regions rank its importance consistently both existing theory and new empirical evidence. A survey design
among the top 10 of the success criteria (Müller and Turner, was chosen to collect quantitative data in a cross-sectional manner
2007). Thus we hypothesize: from a wide variety of individuals, in order to gain the widest
coverage of the resulting theory.
H1.1. Stakeholder oriented governance of projects correlates
positively with project success. 3.1. Questionnaire development

Similarly, the nature of the link between control orientation Four sets of questions were included in the questionnaire.
(behavior versus outcome) and project success is unclear from The first set included information about the last project; the
the literature. While the literature on project management next two sets covered governance paradigms and project
maturity models (e.g. Project Management Institute, OPM3®, success; and the last set collected the respondents' demographic
(PMI, 2013c)), and the literature on the governance of large- information. The questionnaire followed the suggestions of
scale investment projects e.g. Klakegg et al. (2009), emphasize Cooper and Schindler (2011) to ensure that the scales, criteria,
the importance of following processes for successful project and wording were consistent and clear. The project governance
implementation, other research shows a more diversified picture, questions were taken from Müller and Lecoeuvre (2014). The
such as that by Crawford et al. (2008) who showed the need for governance paradigms were selected as they have been used
situational contingency of structures, or Turner and Müller (2004) successfully in several project governance related studies
showing that that control through methodology must find the before and reflect the organization's governance positioning
balance between being too process-focused (i.e. behavior control) with regard to two continuums: (1) shareholder-stakeholder and
or too laissez-faire, because both lead to project failure. All of these (2) behavior–outcome. The project success dimensions were
studies imply a correlation between control structure and success. based on Khan et al. (2013). Its five dimensions (project
Given the general notion of the process orientation of project efficiency, organizational benefits, project impact, stakeholder

Fig. 1. Research model.


618 R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626

satisfaction, and future potential), cover short- and long-term Table 1


implications of project success. A five-point Likert scale was Demographics.
used with low values representing low levels of stakeholder Characteristic N % Characteristic N %
orientation, outcome control, and success. A pilot test was done Sector Gender
with ten respondents. Based on the feedback, minor wording Research & development 31 12.2 Male 194 76.4
changes were made for understandability. The pilot answers Engineering/construction 46 18.0 Female 56 22.0
Information technology/ 120 47.1 Other 1 0.4
were not used in the analysis. telecom Total 251 98.8
To avoid influences through common method bias we Media/arts 9 3.5 Missing 3 1.2
followed the recommendations of Podsakoff and Organ (1986), Relief aid 16 6.3
including confirmed anonymity in the introductory text, different Other 29 11.4 Geography - working
layouts and scales, randomizing of questions, as well as the Total 251 98.4 North America 96 37.8
Missing 4 1.6 Europe 61 24.0
conduction of Harman test for the constructs. Australasia 56 22.0
Position held Other 38 15.0
3.2. Data collection CIO 3 1.2 Total 251 98.8
CTO 2 0.8 Missing 3 1.2
A worldwide, cross-sectional questionnaire was used to collect Project portfolio manager 17 6.7
PMO 10 3.9 Project-related experience
quantitative data for generalizable results, using snowball sam-
Program manager 65 25.6 1 to 5 years 36 14.6
pling. Respondents were contacted using email with a link to the Project manager 82 32.3 6 to 10 years 63 25.6
web survey. In addition, the survey details were placed on project Team member 24 9.4 11 to 15 years 53 21.5
management LinkedIn forums. An email with the survey link was Architect/advisor 6 2.4 16 to 20 years 45 18.3
sent to PMI chapters in Switzerland, Germany, central USA and QA/audit function 3 1.2 20 years plus 46 18.7
Technical stakeholder 2 0.8 Total 243 98.8
Pakistan, asking the chapter presidents to distribute the survey link Business stakeholder 4 1.6 Missing 3 1.2
to their members. Data were collected over 2 weeks in April 2014. Other 35 13.8
We obtained 266 responses, of which 254 were usable for analysis. Total 253 99.6 Work experience
Responses came from 41 different countries: 38% from North Missing 1 0.4 1 to 5 years 36 14.6
America 24% from Europe, 22% from Australasia, and 16% 6 to 10 years 60 24.4
11 to 15 years 46 18.7
from other countries. ANOVA analysis showed no difference 16 to 20 years 49 19.9
between early and late respondents. The average respondents' 20 years plus 52 21.1
work experience was 22 years and the average project-related Total 243 98.8
work experience was 15 years. Sample demographics are shown in Missing 3 1.2
Table 1.
An ANOVA test between the demographic regions showed
no statistical differences (p = 0.249).
Project information is shown in Table 2. Approximately 48% of
control) and the dependent construct (project success) (Van
the projects were less than €1 million in cost. 96% of the projects
de Ven and Poole, 2005).
were of either medium or high urgency. 42% were executed in
matrix organizations and 21% in functional organizations.
Hence, in line with existing conventions, we tested a
3.3. Analysis methods theoretically derived causality through correlation tests at the
variable level, following Van de Ven (2007) using a variance
Analysis was carried out following the guidelines from (Hair method approach as outlined by Van de Ven and Poole
et al., 2010). Data were normally distributed (skewness and (2005).
kurtosis between of ± 2), thus eligible for the techniques used.
Eight responses were removed as outliers and because t-tests
showed that the answers from these respondents where 3.4. Validity and reliability
significantly different from the rest of the sample.
Analysis was done in three steps: Content validity was achieved by using literature-based
measurement dimensions, and face validity was tested and
1. Unrotated factor analysis on each of the three constructs ensured during the pilot. Construct validity was ensured through
(governance orientation, governance control, project success) the use of published measurement dimensions (Khan et al., 2013;
as a Harman test for possible common methods bias (Podsakoff Müller and Lecoeuvre, 2014); pilot testing of the questionnaire;
and Organ, 1986). and, quantitatively, through unrotated factor analyses. Convergent
2. Varimax rotated factor analysis (principal component analysis) and discriminant validity were tested and achieved through
with eigenvalue of 1 was used to establish the factors item-to-item and item-to-total correlations above 0.3 and 0.5,
representing each of the three constructs (Field, 2009). respectively. Reliability can be assumed with all constructs
3. Regression analysis to test the correlation between the showing Cronbach alpha values higher than 0.70 (Hair et al.,
independent constructs (governance orientation, governance 2010).
R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626 619

Table 2 data's appropriateness for this analysis (Hair et al., 2010). All
Project information. questionnaire items loaded on their respective factor and were
Characteristic N % of acceptable reliability (Cronbach alpha), see Table 3.
Duration of last project
Under six months 44 17.3 4.1. Project success
6 months to less than 1 year 67 26.4
1 to 2 years 76 29.9
The factor on project success comprises five sub-dimensions
Over 2 years 66 26.0
Total 253 99.6 (project efficiency, organizational benefits, project impact, future
Missing 1 0.4 potential, and stakeholder satisfaction). A second order factor
analysis combined these sub-dimensions into a single factor for
Level of last project complexity
Low 24 9.4
project success (KMO 0.930, p b 0.001) with high reliability
Medium 117 46.1 (Cronbach's alpha 0.923).
High 111 43.7
Total 252 99.2 4.2. Project governance
Missing 2 0.8

Value of last project The questions on governance loaded on the two respective
Under 500,000 (Euro) 85 33.5 sub-dimensions (KMO 0.812, p b 0.001), which explained 53%
500,000 to 999,999 37 14.6 of the variance in GOV orientation (shareholder–stakeholder)
1000,000 to 4,999,999 61 24.0
and GOV control (behavior–outcome). Both were reliable with
5,000,000 to 50,000,000 43 16.9
Over 50,000,000 27 10.6 Cronbach's of 0.743 and 0.802, respectively. GOVorientation
Total 253 99.6 (shareholder–stakeholder) comprised of the upper five questions
Missing 1 0.4 shown in Appendix 2 (i.e. the governance questionnaire). GOV
Urgency of last project
control (behavior–outcome) comprised of lower five questions in
Low 11 4.3 Appendix 2.
Medium 107 42.1
High 135 53.1 4.3. Correlation between project governance on project success
Total 253 99.6
Missing 1 0.4
Table 4 shows the correlation matrix of the variables.
Last project executed in the following organizational structure Multi-variate regression analysis was done with project success
Projectized organization 81 31.9 as the dependent variable and GOV orientation (shareholder–
Functional organization (Department) 55 21.7
stakeholder) and GOV control (behavior–outcome) as independent
Matrix organization 106 41.7
Other 11 4.3 variables.
Total 253 99.6 Table 5 shows the coefficient table.
Missing 1 0.4 A significant model (p b 0.000) with an R-square of 0.063
and no issue with multicolinearity (VIF b 2) was obtained. The
correlation between GOV orientation (shareholder–stakeholder)
No indication for possible common method bias was found, and project success was positive and significant (p b 0.001,
as a Harman test showed that all questionnaire items loaded on beta = 0.250), supporting H1.1. This constitutes a small, but
their respective factor (Podsakoff and Organ, 1986). significant effect size, also known as practical significance
(Cohen, 1988). However GOV control (behavior–outcome) was
4. Data analysis and results not significantly correlated to project success at p = 0.05, which
rejects H1.2.
Varimax rotated factor analysis was used to establish the The hypothesized correlation between project governance
three constructs. Here a KMO of 0.8 (p b 0.001) indicated the and project success (H1.1) is supported through the significant

Table 3
Scale descriptives.
Measure N Mean Standard Range Original number Scale reliability Skewness Kurtosis
deviation of dimensions (alpha)
Governance
Shareholder–stakeholder 246 2.87 4.05 4.46 2 0.741 0.419 −0.462
Behavior–outcome 246 2.98 4.75 4.51 2 0.802 − 0.203 −0.617
Project success - dimensions (SA01 to SA05) 246 3.81 3.37 4.88 5 0.923 − 0.720 0.552
SA01 Project efficiency 246 3.56 0.78 3.63 1 0.913 − 0.471 −0.061
SA02 Organizational benefits 246 3.82 0.71 3.20 1 0.898 − 0.563 0.062
SA03 Project impact 246 3.95 0.79 3.75 1 0.899 − 0.985 1.192
SA04 Future potential 246 3.71 0.84 3.75 1 0.911 − 0.743 0.372
SA05 Stakeholder satisfaction 246 4.01 0.73 3.50 1 0.906 − 0.774 0.649
620 R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626

stakeholder) orientation IV
Goverance (shareholder- N
GOV corp GOV corporate
correlation. Furthermore, tests with the various demographic
variables as control variables indicated no presence of spurious
variables. That fulfills the two other criteria that need to be met
before commencing a discussion on possible causality (Van de
Ven, 2007).
Subsequently an exploratory analysis was done to analyze the

1.000
nature of the relationship between GOV orientation and project
success. The five dimensions of project success (project efficiency,
GOV control goverance

organizational benefits, project impact, future potential, and


‘behavior- N outcome

stakeholder satisfaction) were regressed as dependent variables


against GOV orientation as independent variable. The results
orientation’IV

showed that GOV orientation (shareholder–stakeholder) was


.000 positively and significantly correlated with all five success
1.000

dimensions. The details are shown in Fig. 2.


The success dimension future potential has the strongest
correlation with GOV orientation (adjusted R2 = 0.063; beta
(Dimension 5)
Stakeholder
satisfaction

0.258****), whereas stakeholder satisfaction has the weakest


.162**

correlation of the five dimensions with an adjusted R2 = 0.022;


−.003
1.000
SA05

DV

beta 0.162**.
(Dimension 4)

5. Discussion
SA04 Future

.676****

.258****
potentia

1.000

−.011

The two independent constructs GOV orientation (shareholder–


DV

stakeholder) and GOV control (behavior–outcome) were tested


on their relationship with project success. Only GOV orientation
(Dimension 3
SA03 Project

(shareholder–stakeholder) is significantly correlated to project


.204****
.696****
.755****

success, where 6.3% of the variation in project success can be


impact

1.000

.015

explained by the governance position along the shareholder–


DV

stakeholder continuum. With a beta of 0.25 (p b 0.001) an


Organizational

(Dimension 2)

increase in stakeholder orientation correlates with an increase in


.763****
.778****
.716****

.236****

project success. The results are consistent with the findings of


benefits

Joslin and Müller (2015) who showed that organizations that are
SA02

1.000

.015
DV

more stakeholder-oriented have greater chances of success in


applying the relevant methodology elements or parts in their
(Dimension 1)
SA01 Project

projects. The results also support findings in IT projects, where


.680****
.689****
.717****
.627****

.237****
efficiency

governance takes a mediating role between project hazards and


.006
1.000

success, by directly influencing project success (Wang and Chen,


DV

2006). Finally, the results give quantitative support to the


qualitative study by Bekker and Steyn (2008), whose inter-
Project sucess
(5 combined
dimensions)

viewees predicted such a relationship. Surprisingly, the second


.902****

.250****
.845****

.899****
.861****
.873****

independent construct, GOV control (behavior–outcome) orien-


.007
1.000

tation, does not correlate with project success. In line with


DV

*p ≤ 0.05; **p ≤ 0.01; ***p ≤ 0.005; ****p ≤ 0.001.

the literature cited above, this is indicative of a situational


SA05 Stakeholder satisfaction (Dimension 5) - DV

contingency of control structures in that organizations where


SA02 Organizational benefits (Dimension 2) - DV

governance is more behavior-control oriented do not necessarily


(shareholder- N stakeholder) orientation IV
Project sucess (5 combined dimensions - DV
SA01 Project efficiency (Dimension 1) - DV

SA04 Future potential (Dimension 4) - DV

achieve higher rates of project success than organizations that are


SA03 Project impact (Dimension 3) - DV

outcome-oriented.
GOV corp GOV corporate goverance
GOV control goverance ‘behavior- N

The finding challenges the governance aspects of frame-


works such as the Carnegie Mellon University's Capability
Maturity Model Integration (CMMI), or the governance
outcome orientation’ IV

process/outcome orientation behind the Project Management


Institute's Organizational Project Management Maturity Model
Correlation matrix.

(OPM3®) (PMI, 2013c) where the premise is that a stronger


process control leads to better organizational results. Along this
line, Yazici (2009) showed that maturity models have only
Table 4

helped to improve project success on a repeatable basis in


certain organizational cultures. Using the competing values
R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626 621

Table 5
Coefficients table.
Coefficients
Model Unstandardized Standardized t Sig. Correlations Collinearity
coefficients coefficients statistics
B Std. Error beta Zero-order Partial Part Tolerance VIF
(Constant) 5,115E-16 ,062 ,000 1000
GOV control Governance ‘control - N ,007 ,062 ,007 ,111 ,912 ,007 ,007 ,007 1000 1000
behavior’ orientation
GOV corp GOV corporate governance ,250 ,062 ,250 4024 ,000 ,250 ,250 ,250 1000 1000
(share- N stake holder) orientation
a. Dependent variable: Project sucess REGR factor score 1 for analysis 1.

framework (Cameron and Quinn, 2006), Yazici demonstrated that namely organizational benefits, project efficiency, project impact
the clan culture, which represents the importance of stakeholder and stakeholder satisfaction, which are all part of conventional
participation, cohesion, shared values, and commitment is the performance measures at both project and corporate level. In
model most linked to project success. This underpins stewardship summary, all five project success dimensions are positively
theory, which proposes that the behavior of individuals in correlated in varying degrees by a stakeholder orientation in
organizations is aligned and supportive to the organizational and project governance.
collectivistic goals instead of individualistic and self-serving
goals. Project managers (agents) are tasked with complex projects 6. Conclusions
and need to get things done, therefore flexibility and trust is
required from their principle (Turner and Müller, 2004). This study empirically investigated the relationship of project
Referring to Fig. 2, the success dimension “future potential” governance and project success. A deductive approach tested a
that relate to enabling, motivating and improving an organization's theoretically derived research model. Two theoretical lenses were
capability to undertake future project work, is the dimension used in the study: agency theory and stewardship theory. The data
most strongly correlated with the governance orientation. This is were collected through a web-based questionnaire with 246
supported by the notion that stakeholder orientation is underpinned respondents from 11 industries evenly distributed across North
by balancing the requirements of several stakeholder groups America, Europe, and Australasia. The research question can
simultaneously, instead of shareholders only (such the share- now be answered: project governance has a small, but significant
holders of a project delivery organization), which is the basis for correlation with project success. Hypothesis 1 is partly supported
long lasting business relationships, as outlined in Donaldson and as one of the two governance dimensions correlates project
Preston's (1995) thesis that “corporations practicing stakeholder success. H1.1 is supported because the stakeholder orientation in
management will, other things being equal, be relatively successful governance correlates positively with project success. Approxi-
in conventional performance terms (profitability, stability, growth, mately 6.3% of the variation of project success correlates with the
etc.)”. This also applies to the other four success dimensions, stakeholder-orientation of the governance structure. The section

Fig. 2. Independent variable (GOV orientation) impact on the five dimensions of project success.
622 R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626

on theoretical implications below outlines some of the contin- (2010) and supported by Van de Ven and Poole (2005) and John
gencies under which this correlation might be assumed to become Stuart Mills:
causal in nature, that is, the underlying assumptions that need to
be met and held constant for assuming that success is to some 1. Time sequence – the cause must occur before the effect.
extent dependent on project governance. H1.2 is not supported, 2. Covariance – a change in the hypothesized independent
as the governance control orientation (behavior–outcome) does variable is associated with a change in the dependent variable.
not correlate with project success. 3. Non-spurious associations – the relationship is not due to
This study's results indicate the importance of understanding other variables that may affect cause and effect.
the governance orientation of the organization governing projects 4. Theoretical support – a logical explanation for the relationship.
and the potential enabling effect of a stakeholder-orientation in
project governance for project success. Yazici (2009) found that The cross sectional design has supported testing conditions 2
culture impacts project success; organizations that are more and 3. Thus, we have shown that covariance exists (condition
stakeholder-participative, cohesive, and have shared values and 2) in form of a significant correlation between the variables. We
commitment are most likely to achieve project success. have also tested for non-spurious associations (condition 3) by
Stakeholder-oriented organizations that have shared values controlling several variables in the regressions. However, the
suggest stewardship relationships are in place. However, this cross-sectional design of the research does not allow to test
can only occur when the necessary situational factors and whether the cause (the existence of a governance structure)
structures are present, including individuals with the appropriate precedes the effect (project success). To assume causality, the
psychological profiles (Toivonen and Toivonen, 2014). When governance structure must be established before a project is
there is a change of culture in the organization due to external chosen. This may be the case in organizations that do not adjust
pressures, for example, a push for short-term benefits, where their governance structures to the type and size of projects they
management trust turns into excessive control will lead to agency take on. However, in many cases it is likely that governance
tendencies (Clases et al., 2003). Determining the appropriate structures are chosen based on the project type. The latter is
governance structures should take into consideration the supported, among others, by transaction costs economics
implications resulting from agency and stewardship perspectives (Williamson, 1979), which claims that governance structures
towards governance and the implications stated below. are established contingent on the specificity of the transaction's
(i.e. the project's) outcome, its general risk, and its frequency.
This view contrasts with, for example, Bekker and Steyn's (2008)
6.1. Practical implications
qualitative (i.e. opinion-based) findings that project governance
impacts project success. To that end we do not find clear evidence
Managers influencing the design of project governance should
for condition 1.
be aware of the importance of a stakeholder orientation for
In terms of testing for condition 4 we have shown in the
project success. This should be included in training programs for
literature review section that published research on governance
these managers, at industry as well as academic level. This
often assumes and tests for a causal relationship between
includes courses in (project) governance, mid and higher level
governance and organizational success. The importance of
management trainings, organizational design courses etc.
stakeholder management in projects echoes the results that
Simultaneously managers should be aware that control
stakeholder orientation in governance correlates with better
structures that foster behavior or outcome control, do not correlate
project results. However, in line with the paragraph above, we
of impact project success on a global basis, but may do so in the
cannot rule out alternative explanations. These include the
particular circumstances of their projects.
possibility that projects with higher risk levels are governed more
Recruitment managers should understand the personality
rigorous than those with lower risk levels, that is, with more
traits of project managers and their governors to ensure that
shareholder orientation and from agency theory perspective, in
their personalities are aligned to a stewardship role within the
contrast to less rigorous and stewardship driven governance for
project governance environment.
lower risk projects. Support for this is indicated by Klakegg et al.,
Project managers should understand the organization's
(2008) and Müller and Lecoeuvre (2014), who showed that larger
governance procedures and work with the authority that defines
projects, such as public investment projects, are subject to stricter
project governance procedures to tailor the procedures to the
governance approaches than smaller projects. If lower risk projects
project environment and/or project type.
fail less often than higher risk projects, then the correlation
between stakeholder orientation and project success is impacted
6.2. Theoretical implications by the spurious variable project risk, which was not tested in this
study.
In this section we discuss the conditions for assuming a causal Hence, we cannot claim causality. A limited causality may be
relationship between project governance (as cause, i.e. independent assumed when the following conditions exist: (1) the governance
variable) and project success (as effect, i.e. dependent variable). structure exists before a project is chosen, (2) the governance
Throughout the paper we have listed the most often used structure is independent of the project type, size and risk, and
“conditions researcher look for in testing cause and effect (3) the governance structure does not change during the course of
relationships” (Hair et al., 2010), as stated for example Hair et al. the project. This should be tested through future research.
R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626 623

Stewardship theory, which is operationalized in this study as individuals are interested in their profession over and above their
the combination of stakeholder oriented governance and outcome- employer demands.
oriented control in project governance, was shown to be an The use of professional associations such as IPMA and PMI for
appropriate lens for assessing project governance. The findings distribution of the questionnaire limited the pool of respondents to
provide evidence for a generalization to a theory (in the sense of only their members. A further limitation of the study was the use
Yin, 2009) in respect of stewardship theory's applicability for of one particular governance model. Other governance models
project settings, and a generalization to the wider population of should be used for similar analyses to get a more holistic picture of
projects and their governance. Stewardship theory and stakeholder the relationship between governance and success.
theory are recommended as theoretical lenses for the development
and implementation of project governance structures.
Simultaneously, the study shows some of the limitations of 6.4. Further research
existing agency theory approaches, especially shareholder theory
driven approaches to governance. Agency theory was operation- In addition to the suggestions above, we suggest that future
alized in this study as the combination of shareholder orientation research should address the nature of the link between project
and behavior control, which relies merely on unilateral return on success dimensions and project governance, and possible
investment thinking and control as governance principle. The moderator or mediator effects that influence this relationship.
study's results show that these approaches are limited in their Further qualitative and quantitative research is needed to
likelihood to predict project results. investigate whether project governance orientation structures
The implications for developing a broader theory of project optimized for project success can exist and thrive throughout an
governance is that a shareholder or stakeholder orientation in organization and under what conditions, even though the main
project governance is required to be implemented in a way that organization's governance orientation may be different.
allows it to flourish within a corporate governance structure which Process studies such as those suggested by Langley et al.
may or may not be supportive of it, without creating conflicts or (2013) are recommended in order to understand the temporal
friction points. To do that, further research is required to identify nature of the elements of project governance, their relation-
the interfaces between project and corporate governance, which ships, and the variations across project life-cycle stages.
can then be used to adapt the two levels of governance to each Moreover future research should investigate the impact of
other. the governance paradigms on the governance of projects at the
program and project portfolio level, and if different, provide
6.3. Strengths and limitations insights as to which paradigm(s) are the most correlated to
program and project portfolio success?
The strength of the study include the use of tested and The study's contribution to knowledge lies in its clarification
validated measurement constructs. Another strength lies in the of a correlation between different project governance approaches
well balanced sample covering the three main regions of the world, and project success. To that end we have provided the ground for
and respondents who are professionals engaged in professional further studies on causality and its direction in order to investigate
organizations, which led to better responses, because these the role of governance as a success factor in projects.

Appendix 1. Project success questions

The following success-related questions were asked regarding the last project:

Project success achieved


My last project was successful in terms of
Not successful Slightly successful Moderately successful Highly successful Very highly successful
Completed according to the specification ◯ ◯ ◯ ◯ ◯
Supplier satisfied ◯ ◯ ◯ ◯ ◯
Enabling of other project work in future ◯ ◯ ◯ ◯ ◯
Project achieved a high national profile ◯ ◯ ◯ ◯ ◯
Yielded business and other benefits ◯ ◯ ◯ ◯ ◯
Met client's requirement ◯ ◯ ◯ ◯ ◯
Minimum disruption to organization ◯ ◯ ◯ ◯ ◯
Cost effectiveness of work ◯ ◯ ◯ ◯ ◯
Met planned quality standard ◯ ◯ ◯ ◯ ◯
Adhered to defined procedures ◯ ◯ ◯ ◯ ◯
Learned from project ◯ ◯ ◯ ◯ ◯
Smooth handover of project outputs ◯ ◯ ◯ ◯ ◯
Resources mobilized and used as planned ◯ ◯ ◯ ◯ ◯
Improvement in organizational capability ◯ ◯ ◯ ◯ ◯
624 R. Joslin, R. Müller / International Journal of Project Management 34 (2016) 613–626

Appendix 1 (continued)
Project success achieved
My last project was successful in terms of
Not successful Slightly successful Moderately successful Highly successful Very highly successful
Met safety standards ◯ ◯ ◯ ◯ ◯
Minimum number of agreed scope changes ◯ ◯ ◯ ◯ ◯
Motivated for future projects ◯ ◯ ◯ ◯ ◯
Project's impacts on beneficiaries are visible ◯ ◯ ◯ ◯ ◯
Project achieved its purpose ◯ ◯ ◯ ◯ ◯
Project has good reputation ◯ ◯ ◯ ◯ ◯
Finished on time ◯ ◯ ◯ ◯ ◯
New understanding/knowledge gained ◯ ◯ ◯ ◯ ◯
Steering group satisfaction ◯ ◯ ◯ ◯ ◯
Complied with environmental regulations ◯ ◯ ◯ ◯ ◯
End-user satisfaction ◯ ◯ ◯ ◯ ◯
Project team satisfaction ◯ ◯ ◯ ◯ ◯
Activities carried out as scheduled ◯ ◯ ◯ ◯ ◯
Finished within budget ◯ ◯ ◯ ◯ ◯
Sponsor satisfaction ◯ ◯ ◯ ◯ ◯
End product used as planned ◯ ◯ ◯ ◯ ◯
Personal financial rewards ◯ ◯ ◯ ◯ ◯
Met organizational objectives ◯ ◯ ◯ ◯ ◯
The project satisfies the needs of users ◯ ◯ ◯ ◯ ◯
Personal nonfinancial rewards ◯ ◯ ◯ ◯ ◯

Appendix 2. Project success questions

Questionnaire for assessing corporate govern ace orientation and organizational control orientation (Müller and Lecoeuvre, 2014).

In my organization
…decisions are made in the best interest of the shareholders and 0 0 0 0 0 0 0 …decisions are made in the best interest of the wider stakeholder community
owners of the organization and their return on investment (RoI) (including shareholder, employees, local communities etc.)
…the remuneration system includes stock-options for employees 0 0 0 0 0 0 0 …the remuneration system provides incentives for community, environmental,
and similar incentives that foster shareholder RoI thinking humanitarian or other non-profit activities outside and/or inside the organization
…prevails an image that profitability determines the legitimacy 0 0 0 0 0 0 0 …prevails an image that wider social and ethical interests determine the
of actions (including projects) legitimacy of actions (including projects)
…I am sometimes asked to sacrifice stakeholder satisfaction 0 0 0 0 0 0 0 …I am sometimes asked to sacrifice the achievement of financial objectives for
for the achievement of financial objectives improvement of stakeholder satisfaction
…the long term objective is to maximize value for the owners 0 0 0 0 0 0 0 …the long term objective is to maximize value for society
of the organization

The management philosophy in my organization favors…


…a strong emphasis on always getting personnel to follow the 0 0 0 0 0 0 0 …a strong emphasis on getting things done even if it means disregarding formal
formally laid down procedures procedures
…tight formal control of most operations by means of 0 0 0 0 0 0 0 …loose, informal control; heavy dependence on informal relationships and the
sophisticated control and information systems norm of cooperation for getting things done
…a strong emphasis on getting personnel to adhere closely to 0 0 0 0 0 0 0 …a strong emphasis to let the requirements of the situation and the individual's
formal job descriptions personality define proper on-job behavior
…support institutions (like a PMO) should ensure compliance 0 0 0 0 0 0 0 …support institutions (like a PMO) should collect performance data in order to
with the organization's project management methodology identify skills and knowledge gaps
…prioritization of methodology compliance over people's 0 0 0 0 0 0 0 …prioritization of people's own experiences in doing their work over methodology
own experiences in doing their work compliance

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